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2021 (8) TMI 911 - AT - Income TaxTP Adjustment - Comparable selection - exclusion of the comparables directed by Ld.CIT(A) i.e. Exensys Software Solutions Ltd.; Thirdware Solutions Ltd., Visualsoft Technologies (Seg.); Sankhya Infotech Ltd. from the final list of the comparables - HELD THAT:- We find that the Ld.CIT(A) after considering the material placed on records and has given finding on facts in respect of the functional comparability of the comparables selected by the TPO. The Revenue has failed to effectively rebut the finding of Ld.CIT(A). Moreover, this issue has already been examined in the case of Colt Technology Services India Pvt.Ltd . [2012 (10) TMI 1025 - ITAT DELHI] - No reason to interfere in the findings of Ld.CIT(A). Claim of depreciation on software - no ownership claim of the assessee proved - HELD THAT:- Undisputedly in this case, the invoices were raised after 15 months as observed by the Assessing Officer. Further, the Assessing Officer has categorically observed that invoices reflected that sales tax/VAT has been charged on sale of goods. Such taxes have been charged in August 2005. He observed that without invoices and charging of sales tax, sale could have not been affected. The assessee had not become the owner of the software wholly or partly before 31.03.2005 hence, on account of ownership claim of the assessee is failed. We are in agreement with the view expressed by the Assessing Officer in our considered view merely downloading of software and providing key to use by the vendor would not ipso facto entitle the assessee for claiming depreciation. Section 32 of the Act provides depreciation on the eligible assets owned wholly or partly by the assessee and used for the business or profession. Hence, the law is clear. There is no ambiguity under the law. Without proper sale, the assessee could not have owned wholly and partly the assets on which depreciation have been claimed. We, therefore, set aside the finding of Ld.CIT(A) on this issue and restore the finding of the Assessing Officer. Working capital adjustment while benchmarking the international transaction of provision of software services - HELD THAT:- In view of the direction given by Ld.CIT(A), we hereby direct the TPO to allow working capital adjustment to the assessee. Addition on account of liabilities returned back in relation to acquisition of fixed assets - HELD THAT:- applying the ratio laid down by Hon’ble Supreme Court in the case of CIT vs Mahindra & Mahindra Ltd [2018 (5) TMI 358 - SUPREME COURT] and Nectar Beverages Pvt.Ltd. [2009 (7) TMI 5 - SUPREME COURT] hence, the amount written back in respect of purchase of fixed assets, being capital in nature, is not a write back of trading liability covered u/s 41(1)We find merit in contentions of the assessee. We, therefore, direct the Assessing Officer to delete the addition made on account of liability written back related to capital assets.
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